What would the rumoured Corporation Tax hike to 24% cost your company?

According to some media reports, the Chancellor is considering raising Corporation Tax from 19% to 24%, but what would this mean for Limited Company contractors? In this blog we investigate the affect his decision will have, and how Aardvark Accounting can help.

What do we know so far?

The government recently floated the idea of tax rises to the British media prior to the Autumn Budget, to gauge the public’s reaction.

Considering COVID-19’s UK’s government support measure costs, coupled with the economy’s inaction since spring, it’s no surprise that the government is looking for ways in which to raise funds in the form of additional tax.

What’s being put forward?

Corporation Tax may be raised from 19% to 24%.

What does this mean for Limited Company contractors?

Using the following example, this is how much more a contractor could expect to pay:

Turnover: £80,000

Annual business expenses: £7,000

Pension contributions: £6,000

Director’s salary: £9,500

Profit: £57,500

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Corporation tax 2020/2021 @ 19%: £10,925

 

So if CT rises to the predicted 24%, based on this example the tax would rise to approximately £13,800 – a total increase of £2,875.

 

How can Aardvark Accounting support you?

Whenever a change in tax is announced, usually the first thing that’ll cross your mind is ‘how much will this cost me?’ Here at Aardvark we take out the guess work, and give you an exact idea of what to expect. We deal with the difficult numbers, and ensure you’re paying the right amount of tax, leaving you to enjoy your take home pay. Get in touch today to find out more.